SmartPhone Brands Snub Carriers As Telstra Handset Sales Fall

As mass retailers benefit from selling smartphone handsets, at the expense of carriers, several brands have moved to exclusively release smartphone models to retailers such as JB Hi Fi and Harvey Norman because of the high cost of dealing with carriers.

As a result, carriers are now taking handset customers away from Optus, Vodaphone and Telstra, this has also led to an increase in sales of accessories such as covers, cables and PowerBank for retailers.

Last week we revealed that Telstra had dumped Andrew Vollard their head of mobile following 12 months of falling handset sales. ChannelNews has been told that Telstra is currently restructuring their mobile operation and that further cuts could follow.

It’s believed that they are also looking at a major restructure of their retail network to better compete with retailers.

Among the brands to have benefitted from an expansion of smartphone sales by retailers is the Lenovo owned Motorola, who last week announced deals with Woolworths, Coles and Officeworks, HTC who has launched several models this year exclusively at JB Hi Fi, who is also ranging Oppo smartphones after major losses from the collapse of Dick Smith.

Analysts claim that while carriers have cuddled up to big brands such as Apple and Samsung smaller brands such as Huawei who was snubbed by Telstra are now growing sales via the mass retail channel. At the same time supermarkets who have moved to selling cheap SIM connections which by majority operate on the Telstra and Optus networks have moved to expand sales of the sub $499 smartphone.

Earlier this year Telstra has seen its first-half profit tumble to $1.8 billion, hit by the effects of tougher competition, adverse regulatory rulings and ongoing restructuring.

Net profit was down 14.4 per cent on last year’s first-half result and well below the market’s, and the company’s own, expectations.

Sales revenue fell to $12.8 billion, 3.4 per cent down on last year and the company’s guidance.

Mobile revenues fell to $5 billion, down almost 9 per cent on the first half last year, while traffic over the mobile network in the 12 months to December increased 39 per cent.

Fixed line revenue also fell sharply, down almost 5 per cent on last year to $3.3 billion.

A senior executive at a major Chinese smartphone brand said “The carriers are set to get hurt with the arrival of Amazon who sell millions of handsets every year. The carriers have spent years bullying manufacturers with rebate and marketing demands. as a result, several brands such as ours have moved to sell handsets via mass retailers. They are deliver a better instore experience and their brand resonates with consumers who are fed up with the carrier network failing”.

Another manufacturer said that Telstra is losing customers because they have been price gouging older customers who after their contract has run out have not offered them a cheaper deal on their network.
They said “When a consumer buys a package from a carrier it contains a network connect cost as well as the cost of a handset. When the contact finishes after 24 months the likes of Telstra and Optus as well as Vodafone are not reducing the cost of being on their network”.
“They added “For example a $89 monthly carrier contract with a handset could be reduced to $50 without a handset from the carrier. Consumers need to consider this when they go to buy a handset outright from a retailer as opposed to a carrier”.
None of the carriers have commented for this story.

David Richards has been writing about technology for more than 30 years. A former Fleet Street, Journalist He wrote the Award Winning Series on the Federated Ships Painters + Dockers Union for the Bulletin that led to a Royal Commission. He is also a Logie Winner. for Outstanding Contribution To TV Journalism with a story called The Werribee Affair. In 1997, he built the largest Australian technology media Company and prior to that the third largest PR Company that became the foundation Company for Ogilvy PR. Today he writes about technology and the impact on both business and consumers.